India Infrastructure Finance Company (UK) Limited (IIFCL UK), the overseas subsidiary of the state-owned India Infrastructure Finance Company, approached the National Company Law Tribunal (NCLT). The purpose of the application is to initiate bankruptcy proceedings against Mumbai Metro One Private Limited (MMOPL) due to an alleged debt of approximately 1745 crore rupees.
MMOPL is controlled by Reliance Infrastructure. This petition was filed under Section 7 of the Insolvency and Bankruptcy Code (IBC) and relates to an alleged breach of the terms of an External Commercial Borrowing (ECB).
Case Review Process
The case was heard by a bench comprising Justice Nilesh Sharma and Technical Member Samir Kakkar on Wednesday. IIFCL lawyers informed the tribunal that the total outstanding amount is approximately 182 million US dollars. Upon request for details, it was clarified that the principal debt amounts to about 56.35 million US dollars, with the remainder being interest. The date of default was stated as April 1, 2018.
The creditor relied on MMOPL's balance sheets, which allegedly contained an acknowledgment of the existing debt and the fact of default. A document registered in Form C of the National Electronic Governance Services (NeSL) was also used.
Identified Deficiencies and Tribunal Requirements
However, the tribunal pointed out several shortcomings in the submitted application and granted IIFCL UK seven days to rectify them. One key issue was the statute of limitations. Since the alleged default occurred back in April 2018, the bench required the creditor to justify how the bankruptcy petition falls within the legally prescribed limitation period.
IIFCL cited subsequent acknowledgments of the debt in MMOPL's balance sheets and Offers of Terms Settlement (OTS), including an offer dated September 6, 2022. The tribunal ruled that IIFCL must submit a consolidated table demonstrating how successive acknowledgments extended the limitation period.
Furthermore, the tribunal questioned the inclusion of amounts that became due during the period covered by Section 10A of the IBC, which prohibits bankruptcy proceedings for certain defaults arising during the Covid-19 pandemic. When the bench asked whether payments due during the Section 10A period were excluded, the IIFCL lawyer admitted that they had not been separately identified.
The bench noted that debts covered by Section 10A cannot be claimed under the bankruptcy procedure and warned that the petition could be dismissed if such amounts remained part of the claims.
Another deficiency related to the currency of the claim. Although the debt was stated in US dollars, the bench noted that Form 1 also requires the amount to be specified in Indian Rupees. The lawyers agreed to file a corrected form. The tribunal also noted that while Form C of NeSL was submitted, Form D was missing.
The bench issued a notice to IIFCL UK in accordance with the first clause of paragraph 7(5) of the IBC and allowed seven days to correct the deficiencies. It was also possible to submit an additional affidavit and a corrected Form 1. The next hearing is scheduled for October 12. IIFCL also informed the tribunal that about 10 percent of the debt was repaid in December 2022, after which no further payments were received.